News

21 Apr 2020

G20 Agriculture Ministers agreed to cooperate closely and take concrete actions to safeguard global food security and nutrition to counter the consequences of the COVID-19 pandemic. This includes ensuring the continued flow of food, products, and inputs essential for agricultural and food production across borders and protecting the health, safety, welfare, and mobility of workers in agriculture and throughout the food supply chain.

Ministers took note of AMIS’ assessment that "at present global food supplies are adequate and food markets remain well balanced" and committed to "continue providing timely and reliable information on global food market fundamentals to help markets, countries, and consumers make informed choices." Where appropriate, G20 Agriculture Ministers will "coordinate policy responses, supported by the AMIS Global Food Market Information Group and the AMIS Rapid Response Forum."

Read the complete Ministerial Declaration here: https://g20.org/en/media/Documents/G20_Agriculture%20Ministers%20Meeting_Statement_EN.pdf

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03 Apr 2020

Joint statement of the outgoing and incoming AMIS Chairs: Marcelo Fernandes Guimarães of Brazil’s Ministry of Agriculture and Anastassios Haniotis of the European Commission.

The rapid spread of COVID-19 poses a serious challenge to global food security. This challenge can only be overcome through close coordination and coordinated efforts of the world’s leading players in food markets, which are united in the Agricultural Market Information System (AMIS).

AMIS was created by the G20 in response to the food price crisis of 2007/08. Ever since its establishment, the initiative has successfully contributed to maintaining stability in global food markets both by enhancing food market transparency and by promoting policy dialogue and coordination.

In sharp contrast to market developments witnessed during the last food price crisis, which was triggered by cereal supply tightness, current market uncertainties are not linked to scarcity. In fact, latest AMIS estimates see cereal production close to historic highs while stocks are considered to be at comfortable levels.

Instead, the COVID-19 pandemic is impacting food systems as a whole, which makes a concerted response even more pertinent. An unexpected and fast decline in commodity prices has hit producers while a strong depreciation of most currencies against the US dollar risks wiping out any price benefits for consumers: a combination that could potentially threaten global food security for some time to come. In addition to this, lockdowns, quarantine measures and border closures aimed at containing the virus have started to have crippling impacts on logistics and transport, which in some countries have paved the way for hoarding and panic buying. In many places, these measure have also resulted in labour shortages at various stages of the food supply chain, such as harvesting, processing and distribution. Governments thus need to urgently address these challenges without putting at risk the health of workers.

Against this background, AMIS calls for all countries to ensure the smooth functioning of their food systems with particular attention to the most vulnerable, who are facing ever more economic hardship. Protecting the health of people should of course remain the main priority of countries. However, policy makers must also ensure that supply chains continue functioning smoothly, including the movement of goods across borders. In this regard, we encourage all countries to refrain from implementing trade restrictions, as millions of people around the world depend on food trade for their daily nutrition.

Fulfilling the mandate established by the G20, AMIS will remain vigilant and continue keeping a close watch on international food market developments so as to enhance transparency and assure policy coordination in these troubled times.  

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02 Apr 2020

While the impact of the coronavirus crisis on global food markets has so far been limited, the pandemic poses a serious threat to food security at local level. According to official statistics, the virus has not yet spread widely in countries where food insecurity is pervasive, most notably in Sub-Saharan Africa. If it did, the outbreak could be expected to have similar effects to previous epidemic-induced shocks, such as the Ebola Virus Disease, which caused steep harvest reductions, food price spikes and aggravated food insecurity. Additionally, and perhaps more imminent, is the risk posed by the global economic downturn caused by the coronavirus crisis, which may compromise import-dependent countries’ ability to purchase foods and cause income losses for households, with acute food security repercussions. 

Agricultural production systems in the most vulnerable countries are predominantly labour intensive. Quarantine measures, self-isolation and aversion behaviour in response to an outbreak would therefore cut the labour supply, potentially resulting in acreage contractions, limiting crop management and ultimately curbing harvests. Whilst such effects would immediately dent domestic food supplies, in the medium-term income-earning opportunities, from crop sales for instance, would also be negatively affected. Moreover, low reserves of food staples, a common characteristic of low-income countries and households, limit the ability to modulate food supplies in instances of production shocks and interruptions to trade, extenuating vulnerabilities. 

Concurrently, the slowdown in the global economy and disruptions to global agricultural supply chains have cutback demand for cash and high-valued crops, such as fruits, coffee and tea, which are key export-earners in many less-developed countries. These reductions will translate into income losses for farming households, while national foreign currency reserves could shrink, with implications for funding of social-safety net programmes and the ability to pay for food imports. Particularly in urban areas of less-developed countries, the slowdown in economic activities and movement restrictions are likely to cut households’ incomes and purchasing power, factors that would aggravate food insecurity. If the crisis is of relatively short duration, people could be expected to switch to cheaper but less nutritious foods, therefore resulting in increases in nutrient deficiencies, rather than a broad decline in calories that would result from a prolonged pandemic.

There is a clear reciprocal relationship between health and agriculture, particularly for rural households. Low levels of agricultural productivity and poor food systems can foster a higher prevalence of malnourishment, increasing a population’s vulnerability to morbidity and the impact of disease outbreaks, such as COVID-19. Although immediate interventions are and should be directed to contain the outbreak, this pandemic also shows the urgent need to strengthen the resilience of agriculture and more broadly calls for increased efforts to eradicate hunger.

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20 Mar 2020

In view of the many uncertainties regarding the COVID-19 pandemic, the AMIS Secretariat Steering Committee convened a virtual extraordinary meeting on 19 March to discuss possible implications for global food markets.

While previous crisis situations of global food markets have usually been triggered by supply tightness, the AMIS Secretariat confirmed that current food supplies (of cereals in particular) are regarded as sufficient to meet anticipated demand. However, the pandemic might seriously threaten food security at local level, especially in vulnerable countries.

Regarding market developments of the four AMIS commodities:

  • Wheat prices have generally been under downward pressure, already prior to the global spread of the coronavirus. The production outlook for 2020 remains favourable despite possible significant year-on-year declines in some countries (e.g. UK and the Ukraine). Most recently, wheat prices have started to increase, mainly because of a faster pace of wheat purchases from world markets, possibly fueled by concerns over the possible imposition of export restrictions by countries facing a rise in their domestic food inflation. Under normal market conditions rising stocks or inventories could have a bearish impact on prices. However, in view of current uncertainties it could have the opposite effect as some countries may accelerate their foreign purchases to build bigger reserves in anticipation of an aggravating currency situation or serious disruptions in deliveries and domestic distribution.
  • The situation for maize is very different from wheat. Maize prices were relatively stable before the crisis but started to fall sharply with the slide in oil prices as well as the global economic slowdown. Lower oil prices negatively impact demand for maize, especially in the US where one third of domestic maize production is used for the production of fuel ethanol. In addition, a stronger dollar, as is now the case, weighs heavily on export competitiveness of US maize at a time when large export supplies are available from cheaper origins in South America.
  • Global soybean prices are also under downward pressure, mostly due to large production in Brazil and a weakened Brazilian currency, and turmoil in energy markets, similar to the situation of maize. The expectation that the US crop will recover in 2020 is also seen to contribute to weaker prices in US futures. In addition, concerns over the impact of the coronavirus crisis on demand and a possible world-wide recession are expected to keep soybean markets under pressure.
  • As for rice prices, these have been on the rise since December 2019, even though price movements have not been homogenous. In the Indica market, the sole segment to have seen prices strengthen in recent months, gains have most notably concerned Thai and US prices, in both cases reflecting tighter exportable availabilities due to production shortfalls endured this season. This has encouraged buyers to turn to competing origins, such as Pakistan and Viet Nam, where prices have risen as a result, albeit less sharply than those of Thailand. Underscoring the diverging trends witnessed in the rice market in recent months, quotations in India, the world’s largest rice exporter, have actually softened, indicative of its ample rice availabilities and tepid global import demand. Policy responses to the coronavirus crisis have so far mostly focused on averting panic buying and ensuing upward pressure on domestic quotations, including by issuing reassurances to consumers that supplies in local stockpiles were sufficient to meet immediate consumption needs.
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05 Mar 2020

After only two months since the first reported outbreak of a novel coronavirus in Wuhan, a city of 11 million in China’s central province of Hubei, it has already spread to almost 80 countries worldwide (according to the World Health Organization as of 5 March 2020). With more than 90,000 confirmed cases and over 3,000 deaths, COVID-19 has become the most important global health scare since SARS in 2003. China still accounts for the majority of cases, but latest figures suggest that the number of new infections outside of China largely outpaces those inside the country. In comparison, SARS, which also originated in China, spread to 26 countries, infected about 8,000 people and claimed 774 lives. Although SARS was contained rather quickly (within 4 months), it still caused significant panic and economic cost, which mostly fell on China as the most affected country. The implications of COVID-19 will likely be much greater.

Apart from more people and countries being affected, the world of 2020 is also very different from the one when SARS broke out. Today, markets are more integrated and interlinked, with a Chinese economy that contributes 16 percent to the global gross domestic product, four times as much as in 2003. Thus, any shock that affects China now has far greater consequences for the world economy. This week, the OECD cut its forecast for global economic growth in 2020 from 2.9 percent to 2.4 percent, which would be the lowest level since the financial crisis a decade ago, warning that a prolonged and more intensive coronavirus epidemic could even halve this figure to a mere 1.5 percent. 

Global food markets – and the markets for the four AMIS commodities – are of course not immune to these developments. However, they are likely to be less affected than other sectors that are more exposed to logistical disruptions and weakened demand, such as travel, manufacturing and energy markets. While basic food commodities may face some constraints stemming from transport interruptions and quarantine measures, impacts are likely to be less severe and shorter in duration. Also, global reserves of non-perishable goods such as wheat and rice should be sufficient to meet any imminent demand. This is especially so when external shocks are of relatively brief duration as this episode is hoped to be. 

While slower economic growth often leads to a loss of appetite for value-added foods, including meat and vegetable oils, the demand for basic foodstuffs such as bread and rice could actually increase. The panic engulfing many markets today could pose a threat to food security in places where food shelves are emptied in fear of possible shortages. Such developments could indeed give rise to supply interruptions and higher food prices at local level, but for now they are unlikely to have any substantial impact on international markets.

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